San Diego operators buoyant despite housing woes

San Diego operators buoyant despite housing woes

SAN DIEGO —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

Much like in Los Angeles, San Francisco and Las Vegas, a focused effort to revitalize San Diego’s downtown, combined with a six-year housing boom, brought a wave of new condominium growth around the 16-block dining-and-entertainment district known as the Gaslamp. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

Recent redevelopment efforts that brought a new and recently expanded waterfront convention center, the Horton Plaza shopping center and a Major League Baseball stadium, Petco Park, also helped attract scores of restaurants and nightclubs to open amidst the quarter’s turn-of-the-last-century edifices. Trendy, independent restaurants abound, along with branches of national chains like Fleming’s Prime [3] Steakhouse & Wine Bar, Hooters [4], House of Blues [5], McCormick & Schmick’s [6], The Palm [7] and T.G.I. Friday’s [8]. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

A Hard Rock Hotel opened in December, including an outpost of the New York-based Japanese fusion chain Nobu [9] and a unit of the Los Angeles-based frozen-yogurt chain Pinkberry [10]. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

In January, Daphne’s Greek Café [11] chain founder George Katakalidis opened EXY Chic Greek [12], an upscale-casual Greek-fusion restaurant and lounge. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

Other recent new entries include a third location of the Donovan’s steakhouse concept, which also has locations in San Diego’s affluent La Jolla community and Phoenix. Another newcomer is the locally based Bondi Australian Bar & Kitchen [13]. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

More new concepts are coming. A Phoenix-based sports bar franchise called the Tilted Kilt [14]—as in the short skirts worn by its female servers—is scheduled to open near Petco Park in March. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

However, overbuilding, tightening credit and the toll taken by subprime home loans brought the housing boom in Southern California to a screeching halt last year, with San Diego County among the hardest hit. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

In January, for example, more than half of all home sales in the county involved foreclosures or defaulted loans, according to the San Diego Union-Tribune. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

Condominium construction has slowed dramatically downtown, though the number of new units on the market in a 125-block area reportedly increased to 1,000 this year, from 700 last year and 500 in 2005. Another 1,300 units are expected within the next two years. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

Nonetheless, San Diego lost its ranking as the nation’s sixth-largest city over the past decade and now is No. 8, after being surpassed in population by Phoenix and then by San Antonio. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

Still, the downtown population is said to have doubled to 30,000, though neighborhood supporters say existing units have primarily sold to real estate investors, or “flippers,” and absentee second-home buyers. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

But restaurant operators continue to search out locations downtown. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

Mike Spilky, who specializes in restaurant real estate in San Diego, said the downtown area including the Gaslamp has seen a lot of turnover in recent months. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

“We couldn’t find a restaurateur that would sell when we started a few years ago,” he said. “Now the pot is stirring a bit, but there’s also a lot of competition. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

“We still have operators who want to be there. If there’s an opportunity to grab a great location, they’re going for it.” —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

Nick Tomasello, owner of the nine-year-old Nicky Rotten’s, recently grabbed a location next door to his Gaslamp sports bar and restaurant. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

There, Tomasello plans to open a second casual-dining concept called Sloppy Joey’s Pizza & Pasta this summer. The 3,400-square-foot location will seat about 136 and will specialize in Chicago-style pizza. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

Like Nicky Rotten’s, the next-door restaurant will have an average check of about $12 to $13 per person. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

“We feel there’s a real niche for affordable food here,” he said. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

Despite what he says has been a tough year for all in the Gaslamp, Tomasello has faith that the residential growth that had been foreseen until recently in the neighborhood will come eventually. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

“It was oversaturated and over-priced, but the market will settle,” he said. “This is one of the most dynamic districts in the country.” —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

Daphne’s Katakalidis, owner of EXY, agreed. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

The 250-seat restaurant and lounge features Greek-influenced contemporary cuisine, with entrées ranging from $20 to $30. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

The opening of EXY has been soft to allow the staff to get up to speed, but Katakalidis hopes the restaurant will eventually turn about 200 covers per night. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

“The Gaslamp has become the downtown urban living area,” he said. “We’re long-term players, it’s not like we have to become profitable tomorrow.” —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

The vintage Gaslamp Quarter alone includes about 100 restaurants as well as 35 to 40 nightclubs, some of which have a restaurant component. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

While space inside the quarter is limited, an increasing number of restaurants are moving into areas around the district, such as the East Village [15] area near Petco Park, where rents are slightly lower, but operators have to work even harder to attract foot traffic off the quarter’s central 5th Avenue strip, said Dan Flores, marketing manager for the Gaslamp Quarter Association. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

Overall, downtown operators may be feeling a general downturn because of the mortgage crisis, Flores said, but convention and tourism is as strong as ever. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

In January, the city raised the hotel tax from 10.5 percent to 12.5 percent to raise an estimated $26 million to $30 million in funding to promote San Diego as a travel destination. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

David Cohn, owner of the multiconcept Cohn Restaurant Group [16], based in San Diego, has four restaurants in the downtown area, all of which are doing relatively well, considering the overall macroeconomic climate. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

“We were conservative in our estimates for this year, taking into account the minimum-wage increase in California, and we’re planning on some small price increases this year,” said Cohn, who chairs the Gaslamp Quarter Association. “This is one of those areas that has become so popular that it’s over-restauranted, but it’s still growing.” —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

The Gaslamp location of Sammy’s Woodfired Pizza [17], opened 14 years ago by the Ladeki Restaurant Group of San Diego, has been recording comparable-restaurant sales growth of about 8 percent over the past year, said Tom Penn, the group’s vice president. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

The 14-unit casual-dining chain has average-unit volumes of about $3 million per year, and is opening a new location in the town of La Mesa, just east of San Diego, this year, as well as two in Las Vegas. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

Ingrid Croce, whose Croce’s [18] Restaurant and Jazz Bar opened 23 years ago in the Gaslamp, said 2007 was the best year the restaurant has seen in the past decade. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

“We’re trusted and known by conventioneers and repeat visitors,” said Croce, whose restaurant is themed for her late husband, singer-songwriter Jim Croce. “But if you were expecting locals and were building your restaurant based on residents coming in, you were probably disappointed. —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.

“Downtown was overbuilt by condos, and by restaurants and bars, without question. But it’s like a teenager that needs the opportunity to grow into itself. San Diego has just begun.” —This city’s downtown may be near the epicenter of the nation’s housing crisis, but you wouldn’t know it by the number of restaurants jostling for position in and around the historic Gaslamp Quarter.